August sales of new homes the lowest since June 2000

WASHINGTON -- New-homes sales tumbled in August to the lowest level in seven years, a sign that the credit crunch is aggravating an already painful housing slump.

WASHINGTON -- New-homes sales tumbled in August to the lowest level in seven years, a sign that the credit crunch is aggravating an already painful housing slump.

Sales of new homes dropped 8.3 percent from July, the Commerce Department reported yesterday, driving down sales to a seasonally adjusted annual rate of 795,000. That was the lowest level since June 2000.

"This is just hideous," said Ian Shepherdson, chief economist at High Frequency Economics, a private forecasting firm.

The median sales price in August fell 7.5 percent from a year earlier, to $225,700. That was the biggest drop in percentage terms in nearly 37 years. The average sales price dropped 8 percent in August from a year earlier, to $292,000. That was the biggest decline in 17 years.

Sales fell in the South and the West in August, compared with July. However, sales rose in the Northeast and Midwest.

The new-homes sales report, combined with other recent economic reports showing a sharp drop in demand for big-ticket manufactured goods in August, suggested the economy lost momentum going into fall.

In another report, fewer people signed up for unemployment benefits last week, raising hopes that the recent weakness in the jobs market won't be long-lasting.